thank you so much brother, toure. i am michael eric dyson in for martin bashir. it's monday november 12th. as we observe veterans day there's no shortage of controversy and crisis in washington, d.c. >> the letter of resignation from the director of central intelligence. >> it was like a lightning bolt. >> i don't think we can discount his 37-plus years of service, and i don't think we've heard the last of david petraeus. >> then there's the drama already on capitol hill over how to avoid plunging over the so-called fiscal cliff. >> four more years of gridlock! >> i'm open to new ideas. but i refuse to accept any approach that isn't balanced. >> i don't want to box myself in and i don't want to box anyone else in. >> darn it all to heck. >> there was no way the republicans should have lost. >> let's have a serious debate. >> the president was committed -- elected on the basis that he was not romney and romney was a poopy head. >> they're going to defend a bunch of millionaires? >> i was long last week as was

virtually every major republican analyst. >> bounce with me. come on, bounce with me a little bit. come on. ♪ bounce with me, indeed. it's the first week after the election, and the big story was supposed to be the looming fiscal cliff. but there's nothing like a high profile sex scandal to distract washington. with headlines dominated today by the abrupt resignation of cia director david petraeus over an extramarital affair. some lawmakers are now calling for an inquiry. we're now learning that high-level officials at the fbi and the justice department were notified in late summer that fbi agents had uncovered the affair that led to petraeus' downfall. it all started in early june when a florida woman named jill kelley pictures here with her husband, petraeus, and his wife,

alerted agents to e-mails she described as e-mails. they told kelley, a petraeus family friend, to stop socializing with generals. those anonymous e-mails led investigators to paula broadwell and evidence of the affair. now some lawmakers are asking why the fbi didn't inform them or the white house sooner. >> we received no advance notice. it was like a lightning bolt. this is something that could have had an effect on national skur security. i think we should have been told. >> it seems this was going on for several months, and yet now it appear that is they're saying that the fbi didn't realize until election day that general petraeus was involved. it just doesn't add up. >> adding to the headache and the controversy, petraeus was set to testify at a closed door hearing on the benghazi attack on thursday. with acting director michael morell now going in his place. lawmakers continue to insist that they want to hear from petraeus.

>> but we have four dead americans in benghazi. we have a national security failure along in the making. i don't see how in the world you can find out what happened in benghazi before, during, and after the attack if general petraeus doesn't testify. >> of course, all of this comes as president obama faces scrutiny on the handling of the benghazi attacks, struggles to restack his second term cabinet, and oh, yeah, faces daunting negotiations over that dreaded fiscal cliff. no honeymoon, indeed, for this president. let's get to our panel. in washington msnbc contributor jonathan capehart, democratic strategist julian epstein, and in atlanta msnbc contributor goldie taylor. our tremendous trio. jonathan, fair to say this is not exactly what president obama expected to be dealing with the week after his triumphant election? >> no, not at all. in fact, after election day the president, speaker boehner, senate ma minority leader mitch

mcconnell all talking about the facecle life, what they were going to do, not going to do, what they wanted to negotiate, not negotiate, but on friday, as news exploded out from the cia thanks to our own andrea mitchell that the president accepted the resignation of the cia director, general david petraeus, all of that -- you have to add that plus all the things you talked about, fiscal cliff, to what the president has to deal with. as you said, no honeymoon, indeed. >> and added to what jonathan just said, julian, there are some concerns over this that this is just the tip of the iceberg. i want to play you something senator feinstein said to andrea mitchell this afternoon. >> this thing came so fast and hard. since then it's been like peeling an onion. every day another peel comes off and you see a whole new dimension to this. so my concern has actually escalated over the last few

days. >> it's clear she's suggesting this is going well beyond the realm of a personal matter. how far could we really see this go because it's not being quarter ren teened to the personal. it's getting political in a very, very fast sense. >> i don't see this having far-reaching political consequences, notwithstanding everything jonathan just said. i think there are some national security implications, but in terms of peeling the onion back here, the reporting requirements on the fbi occur when they discover either a crime has been committed or, secondly, that there has been a security breach. at least according to all the public reporting right now, neither of those two things occurred in the petraeus affair. the fbi is left in uncharted territory where the regulations and the law do not spell out when -- if, in fact, they are at any time supposed to contact either the white house, the security agencies, or the congress. and i would just push back a little bit on some of the members of congress who are complaining about the fbi not

doing the note fi kaths earlier. if they believe notification should occur anytime the fbi skofers someone involved in security matters may be having an affair, then they should say that in the statute. and do you know, michael, not to compare this to say 50 years ago, the fbi used to get in a lot of trouble when it would investigate the personal lives of high-profile plig figures and others, you will remember dr. martin luther king, not to compare petraeus to martin luther king, but it is to say they got in a lot of trouble when they were looking at people's personal lives when there wasn't a crime or security question involved. it's congress' obligation here if they believe there should have been reporting earlier, it's congress' obligation to write a statute to say that. >> it's no question that the j. edgar hoover-led fbi did a lot of nefarious things in the name of national security. goldie, of course, petraeus was to testify on benghazi later this week. paula broadwell spoke about the region in denver just before all of this broke.

let's take a listen. >> i don't know if a lot of you have heard this, but the cia annex had actually -- it headachen a couple libyan militia members prison and they think the attack was an attempt to get the prisoners back. >> it does raise questions of what she knew, doesn't it? >> it may raise questions about what she knew. one of a couple things is happened with mrs. broadwell in that clip. either she is telling something that she heard and was not supposed to hear from general petraeus or someone in his command or she's frankly making it up and i'm not clear which it is at this moment. at the end of the day, you know, we do look into people's personal lives when it comes to national security because that's one of the questions, you know, as we advance clearances in this question. general petraeus in this particular affair used his personal e-mail, you know, to cavort with a woman who was not in his command but was close to his command and was his

biograph biographer. that in itself does not present itself to be a security breach but some of the things she's been saying publicly about him, about national security issues certainly present the question. whether or not it should have been reported to congress, that remains to be seen. >> jonathan, doesn't this highlight the rug that's been yanked out from under the president? so much of his military strategy now linked to the cia, whether you're talking about benghazi, iran, the drone program. this isn't just a cog that can be easily replaced in petraeus. >> no, it's not. but, remember, general david petraeus was not the only person in the high command at the cia. mr. morell, who is the interim head, he's been there the entire time, so there isn't going to be -- i don't think there should be worries about continuity of effort, but what happened at the

cia comes at a time when the president was already having to deal with coming up with a successor to secretary of state hillary clinton, possibly finding a replacement for defense secretary leon panetta, finding a replacement for secretary of the treasury tim geithner, all of whom, geithner and clinton, have already said they want to leave. it was reported on friday i believe on andrea's show that lee on panetta might want to go. when you have all of those people who are in senior positions within the administration all needing or wanting to go at the same time, having the cia director resign is not the optimal thing to have happen. >> as the late robin harris said, if you have to go, you got to go but going at this time simultaneously is problematic. in light of the fact that panetta and petraeus were seen as outsiders, they weren't organically grown from within, they didn't involve themselves over the years in the

organizations they led, that was already a problem. this obviously at the very least is a major distraction at a time when the president needs to be focused on a crucial moment of negotiation with congress on the fiscal cliff with everything from tax revenue to military spending at the state. it seems to be a tough way to go. >> but if we know anything about this president, he's extremely cool under fire. this is a guy that can walk and chew gum at the same time. look, i just don't think that the legs on this story are as long as some people think they are for two reasons. one is i think according -- notwithstanding everything goldie just said, according to all the information that we know, there is no crime involved, there's no security breach involved. that's one. secondly, i think while there are some significant questions that we'll be hearing about about what happened in benghazi, particularly when we realize there was a cia operation going on in the outpost there, i think there's a bipartisan commitment right now to getting to the bottom of exactly what happened at benghazi and whether, in fact, the cia was remiss in not dealing with the security

situation more forthrightly, but there's a bipartisan commitment there. i don't see any long-term real political fallout on these things. i see national security implications, but at the same time i think this is something that the president can manage. they will manage it, and they will get on to deal with what are the real other important issues here, namely the fiscal cliff. >> i must say, julian, that your notion of this story not having long legs is chock-full of write irony. this observance of veterans day, i can't let you go without showing our viewers this photo, your boot camp graduation pic. >> wow. >> eye aye aye, ma'am. >> my mother found that photograph last night and sent it it to me. i thought those photographs were long gone along with the 20 to 25 years between then and now. my message is that i am absolutely proud to have served this country, to have, you know, stepped forward as a volunteer enlistment.

you know, but more than that, i'm proud of what the marine corps did for me. i was a wayward urchin child and the marine corps gave me discipline and a career as a broadcaster. i'm thankful to this country for having given me the opportunity to do that. >> that's beautiful. thank you for your service and time. jonathan capehart, julian epstein, stay right there. we'll be right back. coming up, compromise on capitol hill or airbornee over the fiscal cliff? we'll find out soon enough. stay with us. >> mother sent me to come get you, father. paul ryan is doing feats of strength in the drawing room. she thought you'd like to see. >> well, i'd like to see him carry wisconsin. >> father. ah. fire bad! just have to fire roast these tomatoes. this is going to give you a head start on your dinner. that seems easier [ female announcer ] new progresso recipe starters. five delicious cooking sauces you combine with fresh ingredients to make amazing

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fresh off his electoral victory, the president now has exactly seven weeks from today to sell the nation on his plan to avoid the fiscal cliff. his bigger task, convince republicans in meetings this week that it is better to give than to receive when it comes to tax cuts. but that's just the start of it. leaders must also deal with the expiration dates on the alternative minimum tax, the payroll tax, and the extended unemployment benefits, and then there are those big cuts to defense and discretionary spending called sequestration. failure to adequately resolve these matters before january 1st would mean almost certain recession. however, unlike four years ago, some conservatives are sounding, well, down nbs right unconservative when it comes to working with the president. >> let's have a serious debate. don't scream and yell about what one person says. it won't kill the country if we raise taxes a little bit on millionaires. it really won't.

i don't understand why republicans don't take obama's offer to freeze taxes for everyone below $250,000, make it $1 million. really, the republican party is going to fall on its swords to defend millionaires half of whom voted democrat and half of whom live in hollywood. >> jonathan, who was that man calling himself bill crystal. what have you done with him? unleash him. better yet, maybe keep him there and let this bill crystal come out. do you think more people are listening to him this time around with this kind of reasoned and balanced approach? >> it sends a clear signal that republicans and conservative republicans have heeded the message from the american people from the election last week and that they want things to work here in washington and particularly they knew the president campaigned on raising taxes on the wealthy. people knew about it when they were exit polled. they said that they voted for

the president and that they were fine with the president raising taxes on those making $250,000 a year or more. so the president has a lot of cards, but those cards diminish in value the longer this goes on, so don't be surprised if, you know, well, i won't be standing out here in december because it will be cold, but don't be surprised if you see the president saying, hey, congress, particularly lame duck congress, you're not leaving washington until we get a deal, until we get something that we can sign off on, get the -- do something for the american people by december 31st. >> well, we got to carve that lame duck up to feed a lot more people. julian, this is what house speaker john boehner told politico the day before the election about whether president obama has a mandate on this issue. listen, our majority is going to get re-elected, we'll have as much of a mandate as he will to not raise taxes. what do you say to mr. boehner and his supposed mandate right now? >> well, i think that he said that the election would be a

mandate, it was, and he lost. and i think that the important point about the crystal comment is that there's now a wedge in the republican party that the president needs to exploit. there's a wedge between the realist wing and the kind of fa fantasy, childish wing. the realist wing understands the president has a mandate. democrats won the presidency and the senate. we won a majority -- we won the popular vote if you add up the house races as well. look, i think it's in both parties' interest to avoid the fiscal cliff. neither of them want it for a whole host of reasons, including it will be damaging to the economy. we learned recently that president obama in august of 2011 was kind of ready to do a nixon goes to china moment on entitlements and i think that's still on the table. have real entitlement reform. on taxes it's as bill clinton said. it's simple math. spending is at 24% of gdp. taxes are at about 15% of gdp right now. even the most conservative member of congress only proposes to bring spending down to say

20% or even 19% of gdp. you still have a 4% to 5% gap. that represents hundreds of billions of dollars that has to be made up. even if you assume growth could get back to 3%, that won't make up the gap. so taxes have to be on the table. there's no way to get around that if you want to actually deal with the fiscal crisis that we have. and what is most heartening to me is to learn today that the president is willing to take this show on the road, to go out into the states and make the case and actually reinforce that mandate he has and make republicans realize that those that want to work with him will be rewarded as people who are trying to solve people, those that want to obstruct will pay a political praice that they will feel at election time. >> his opening act has got to be rick ross. these haters are not going to hold me back. some of the conservatives are trying to diminish his win last week. here is mr. anti-tax himself

grover norquist. >> just had an election and the house of representatives was elected committed to keeping taxes low. the president was committed -- elected on the basis that he was not romney and that romney was a poopy head and you should vote against romney. and he won by two points. but he didn't make the case that we should have higher taxes and higher spending. >> mr. capehart, you're a real smart guy. do you think grover norquist has a mandate among republicans anymore? >> right now, no. but as time goes along, he very well might. leave aside grover norquist's very eloquent political analysis even though it's wrong. like i said before, the american people went into the voting booth on november 6th knowing exactly what president obama wanted to do in terms of taxing the wealthy. they support what he wants to do in terms of taxing the wealthy, and, you know, with the president leaving the white house and going out and trying to sell the american people, bring the american people along

to put pressure on congress, he's taking a page out of his old playbook with the payroll tax cut. that's what he did to bring the republicans to heel on that issue and he's going to have to do it again and he is going to do it again on this issue. he has to. >> all right. >> you know, michael -- >> julian, this is a kobe buzzer beater. you have to get it in ten seconds. >> well, look, i just think the president has to play a much tougher brand of politics this time around. i think this is a wonderful president. i think he's got to bring an element of ruthlessness into it. the fact he's taken this show on the road shows if there's a message in the second term it is no more mr. nice guy. i will work with you to solve problems but i'm not going to go more than 50% of the way if that. >> sit in that chair that clint eastwood had empty. julian and jonathan, thank you so very much. stay with us. the republican soul searching continues and our top lines are coming up. >> i was wrong last week, as was virtually every major republican analyst, and so you have to stop and say to yourself, if i was

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choose unlimited rewards with 2% cash back or double miles on every purchase, every day! what's in your wallet? here's your invoice. this is the first veterans day in a decade in which there are no american troops fighting and dieing in iraq. 33,000 of our troops have now returned from afghanistan and the transition there is under way. >> new projections out this year show that by the end of president obama's second term, about a million new u.s. military members are expected to transition back into civilian life. they will join the more than 22 million veterans living across this country whose service truly defines the american spirit. on this veterans day holiday, may we pay humble tribute to the men and women who have served this great nation with honor and distinction. stay with us. much more ahead. [ male announcer ] how do you trade?

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from honoring our vets and the cia sex scandal to the republican rebranding effort. here are today's "top lines." >> on the 11th day of the 11th month we pause as a nation and as a people to pay tribute to you. long after our heroes come home, we stay by their side. that's who we are. >> we have breaking news regarding general david petraeus who has just resigned as head of the cia. >> i don't think we can discount his 37-plus years of service. >> i don't see how in the world you can find out what happened in benghazi if general petraeus doesn't testify. >> will he be asked to testify as a private citizen? >> i don't think we've heard the last of david petraeus. >> four more years of gridlock! >> you can't turn down a

president who just won re-election. >> from here on out, we do it my way. >> darn it all to heck. >> he did worse with mormons than bush did. that is a legitimate rape, ladies and gentlemen. >> i still love you, america, but you have hurt my feelings very, very much. >> there was no way the republicans should have lost. in a million years. >> please come inside, father. donald trump is doing a very amusing thing where he's racist. >> this is going to go down as a disaster. >> for the republican party this is a very, very important moment. >> you're uterus is safe for another four years. >> paul ryan is doing feats of strength in the drawing room. >> i'd like to see him carry wisconsin. >> they have to hear the mandate real ref views. >> it won't kill the country if we raise taxes. >> raising tax rates is unacceptable. >> the president was elected on the basis that he was not romney and that romney was a poop y head. >> we didn't sell a positive vision, didn't explain to people what we're for. >> being anti-immigrant doesn't work for them politically and they know it. >> the number of older white men in this country is shrinking.

meanwhile, hispanic gay woman is born every eight seconds. >> it's one thing to shoot yourself in the foot, just don't reload the gun. >> what do i need to learn to better understand america. >> to quote wesley, always bet on black. >> when the rim is in the system ain't no telling, will i love him or will i dishim. steve kornacki co-host of "the cycle." karen finney, and msnbc contributor perry bacon political editor for thegrio.com. steve, here is the story everyone is talking about today. the gop's media cocoon it's called. it says that many republicans fear their party is trapped inside a self-selected media universe in which only their own views are reinforced and an alternate reality is reflected. now, coy hai could have told th

that. what took them so long to wake up and smell the cool late and smell the coffee and get burned by their own tea party? >> i think it was two things. this is the first time things really didn't go their way politically. they decided we're going to oppose everything obama does, we're going to obstruct and be there to get power back when people say the economy has not improved. what happened was obama's approval rating came down fast in 2009. republicans had a great midterm in 2010, and so they could convince themselves for the last two years, the economy is not in great shape. we have already had these successes, we're going to win this election. all these polls are wrong and we're going to win. they never really had to confront it until now. the second thing is you look at this whole question of the closed information loop on the republican side. here is a rare example where really there's no avoidance of confronting reality here because it's something empirical. everybody on the right saying the polls are wrong, romney is going to win this election, well, that's something you can't -- we now have evidence, he clearly didn't win, the polls

clearly weren't wrong. you have to confront it at a certain point. other issues like global warming and stuff countdoesn't come fac face it. >> it's hard to see the republicans blaming their biggest defeat on their biggest cheerleader. here is david frum. >> conservative followership has been fleeced and lied to. i went to tea party rally and i would ask, have tacks gone up or down in the past four years. they could not answer the question. >> he calls it the conservative entertainment complex but what he's really referring to is talk radio and fox news. now, the audience for those outlets has always been kept in the dark. how come there was no problem with that until now? >> because they lost, and i think what they also are realizing, let's be very honest about what's happened here, if you look at the demographics of this country, the republicans

are looking at being locked out of the white house not just for one cycle, but possibly two. this is not a problem that gets fixed in three years, let's be very clear about that. and, you know, we all told them that by not standing up to rush limbaugh, by not standing up to the birthers, by not being willing to push that stuff back and say, wait a second, we're here to focus on issues, they were doing themselves real danger. the other problem though, it's not just -- what's so offensive about all of this is it's not just that there was empirical political data. we're talking about the u.s. census. we're talking about the composition of the country. we're talking about people who have pulled the covers over their heads for the last i don't know how many years who have been, you know, railing on and on about wanting to be a more traditional country and taking our country back who are now having to come to terms with the fact that they're living in a country that is not like their grandparents' country, that will never be like their that again, and this is not something where you just, you know, put on some lipstick or get a new message.

they have to fundamentally go back and say to themselves can you accept the fact that our country is forever changed? >> well, in light of what karen has just said, perry, i think about the phrase from the scholar who talks about demographobia. we are afraid of the new demographics being released. even sean hannity is warming up to am nessty for undocumented immigrants? what's next a new line of solar powered assault rifles from ted nugent? >> you had people like michael steele and jon huntsman, jeb bu bush, even karl rove was saying we need to do more to appeal to latinos and other minorities, but they got sort of caught up in the election and thought they had no problems. they won in 2010 so they assume we have no trouble. in 2012 the election was more diverse again and the republicans had no way of dealing with that.

it's really problematic. an election is a race to 50 points. it's difficult when you have basically said we're going to see you 13 points immediately. romney never made any attempt to appeal to african-americans at all, and i know the black vote is always very democratic but he made no attempt at all for 13% of voters. it's hard to win a game to 50 when you start out with a disvance. >> steve, in light of what perry just said, in addition to that nativism, there's something else republicans will have to part with because of this election, but he's not stepping down without a fight. let's take a listen. >> there's about 78 to 81 members of the democratic party who are members of the communist party. communist, progressive, marxist, socialist, statist, that's another term that's been used. get the hell out of the united states of america. >> maybe stalin prevailed.

it looks like allen west has lost his race yet he hasn't agreed to concede yet but it's not looking good right now. here is my question, without allen west, who is going to keep the spirit of joe mccarthy alive in the senate? >> first of all, allen west may lose this and may concede and probably will but i don't think he's going away. i have a feeling he will be just as loud in the next two years. the one cautionary note i would throw in is the demographic realities that this election underscored are obviously real, but look at the difference between 2008, 2012, and 2010 in the middle when republicans had that big year and what was the difference? it's these core groups for obama that we're talking about didn't show up and there was not much turnout there. that's sort of the nature of a midterm election when your party is in power and democrats are potentially -- i'm not saying huge losses in 2014 but a tougher climate in 2014 where it may be a challenge like it was in 2010 to get these core groups out again and a guy like allen west who maybe had trouble winning a house seat this year, could be better positioned.

i think it's a big challenge for democrats how to make sure that electorate does not look like it looked in 2010. >> that's a great point. karen, we mention immigration as an issue that republicans now seem willing to cave on a bit but what about all those tea party folks? are they just going to go away and go along with the new reality that we're talking about here? >> no, probably not. although, you know, one of the things that was most interesting during the occupy wall street movement, let's remember what the tea party quote, unquote movement really is/was. there was a part of it that i think was a legitimate frustration. there was a part of it that was astroturf funded by freedom works, dick army, the right wing apparatus. when we had occupy wall street, some of the former tea partiers were talking to the occupiers and they agreed on some of their frustrations about, you know, economic inequality and the disparities. some of them may come along as part of the economic conversation. some of them may not come along just as there are americans who are not going to be comfortable

for a very long time with the fact that, you know, gay people should get married and serve in our military openly. that women, unmarried women are a very powerful political force in this country, and you can't tell us what to do with our bodies. that black and brown people are a substantial part of not just our economy, but also the political discourse. sure, there are going to be people who are not going to like that who are going to don't to pretend it doesn't happen. >> amen, miss finney. thanks to steve, karen and perry. coming up on "hardball," chris matthews digs into the gop's alternate universe. that's just ahead at 5:00. up next, we try to make dollars and cents out of military spending. stay with us. into their work, their name on the door, people who are not going to like dollars and cents out of small business saturday is a day to show our support.

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petraeus resigned in scandal as director of the cia, with more details emerging about his extramarital affair and how it was exposed, but the pentagon faces potentially critical budget cuts as congress prepares to take on deficit reduction in the fiscal cliff negotiations. retired u.s. army colonel jack jacobs is an msnbc contributor and recipient of the medal of honor for his service in vietnam. it's a great honor to have you here. >> thank you. >> despite resigning, the plot keep thinkckening. >> there will continue to be disclowe schurs about what the affair was all about and how it was discovered and what role the fbi played and what role the white house played and the possibility of delaying the announcement. there will be plenty of speculation, but in terms of an effect on the cia, on the mission, i don't think it will have any affect whatsoever. it's a large organization with

lots of missions. the man who is currently the acting director and very, very able. eventually he will be replaced and there will be somebody who will be nominated to take his place and petraeus' place, but the cia will carry on doing what it needs to do and being part of the overall intelligence apparatus of the american government. >> sure. well, congress is likely to call petraeus to testify on benghazi, even as they question why they were kept in the dark about an fbi inquiry which led to his resignation. do you think the sex scandal in any way affects the way he's questioned before congress? >> oh, i think it will. it would be interesting to see what tenor it takes and what the senators and congressmen, assuming he gets before both houses, have to say before talking to him. as you know, these hearings have a tendency to be less a question and answer period than it is an opportunity for the members to vent their spleen or talk about what they want to. so that part will be very, very

interesting. in terms of extracting real information about what actually took place and what role the cia had in what took place in benghazi, i believe that any investigation will determine that they had no role, that by the time the cia could do anything it was all over. >> well, let me ask you a kind of sociocultural question. a lot of those senators have themselves had affairs, either acknowledged or not. nobody hands are clean and everybody has blood. don't they have to tread just a bit more carefully lest their own bad laundry be exposed to the world? >>le, lwell, i think that's one the reasons what i said earlier will probably pertain. they might tread lightly in talking about him and to him. they will probably talk initially about how they're just going to get after the facts, and my guess is they and their staffers will try very, very hard to do only that and exactly that. i'll be surprised if very much

about his relationship outside the cia is going to have -- is going to boil over in the hearings themselves. meanwhile, there will be lots in the press you can bet. >> no doubt about that. inquiring minds want to know. with the war in iraq over and the president winding down the war in afghanistan, the pentagon faces some deep budget cuts. defense secretary leon panetta has called the cuts potentially devastating. what do you think that means and what would likely get cut? >> everything is going to get cut. if there's no agreement made across the board cuts will be made. i think you're talking about $483 billion. that's a great deal of money. and it's going to be arbitrary and it's not for nothing that secretary panetta is running around with his hair on fire. this is a guy, by the way, who made his name cutting budgets. so he knows what he's talking about, but you can't cut across the board any budget, including but especially the defense budget, without having a really

devastating impact on things like flight hours, am niths, training, all the things that we need to keep the army, air force, navy, and marine corps prepared and operating. that sufficient is going to get slush eed arbitrarily. that's what panetta is worried about, what i'm worried about, and that's why there's got to be some agreement before all that stuff gets cut just arbitrarily. >> colonel, we'll leave it there. colonel jack jacobs, hthank you so much for your service and your time. >> thanks for having me on the program. coming up next, we'll head to the white house where there is no shortage of work to do as the president heads toward a second term. first jon fortt has the cnbc market wrap-up. >> michael, you know, lots of people seem to have taken the day off when it comes to trading, too, as well they should to honor our veterans. take a look at the boards. the dow and nasdaq barely budged at all. the s&p up only fractionally. microsoft was down about 2% on their acknowledgment that the

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now we head inside the white house. president obama is not holding any public events today but as he prepares to meet with congressional leaders, there is sure to be a great deal of discussion about general david petraeus and the upcoming deficit battle in congress. nbc's kristin welker joins us live from the north lawn. hey, kristin. >> hey, michael. >> look, you have spent the weekend talking to former aides and friends of petraeus. what insight have they given you into this rather seamy story? >> reporter: a couple things. first of all, i have spoken to two of his former aides and friends who say they have spoken to petraeus, and he is deeply remorseful about what he has

done. one person who spoke with him by phone this weekend says that he knows that he, quote, screwed up. he knows that this is going to be a long road back with his family. he's hoping to heal his family but he also knows he essentially sacrificed what he refers to as the best job he could ever have. that's how general petraeus was feeling this weekend. as for the details coming out of some of those conversations with his former friends and aides, they say this relationship lasted less than a year. it started once he got to the cia. so after he left active duty and ended four months ago. they also insist that jill kelley, who s of course, the woman who says she was getting harassing e-mails from paula broadwell, his biographer and the alleged person with whom he was having the extramarital relationship, that jill kelley is just a friend. they say she's a family friend. that the families have known each other for a long time.

jill kelley lives down in florida. those are the details that are starting to come out. he's starting to reach out to friends and former aides and essentially to apologize and express remorse. >> sure. it's a profoundly tragic and moving story all at once. the president will meet with several stakeholders this week, including congressional leaders on economic path forward. how confident is the president that he's got enough political capital to finally get republicans to compromise and avoid the so-called fiscal cliff before the end of the year or will it be deja vu all over again? >> reporter: we are going to have to wait and see. that's basically what all sides are saying. the president sort of is reminding everyone right now, he won the election, 60% of the american people agree that the wealthy should pay a little bit more. that is, of course, the platform on which he ran. however, they're still stuck on this issue of tacxes. some of my republican contacts on the hill say they're not willing to increase taxes on the wealthy. having said that, i think they

know they cannot have a repeat of the summer of 2011. >> kristin welker, that you have so much. >> reporter: thanks. >> we'll be right back to "clear the air." ll horse is frowned upon in this establishment! luckily though, ya know, i conceal this bad boy underneath my blanket just so i can get on e-trade. check my investment portfolio, research stocks... wait, why are you taking... oh, i see...solitary. just a man and his thoughts. and a smartphone... with an e-trade app. ♪ nobody knows... [ male announcer ] e-trade. investing unleashed. [ male announcer ] it's that time of year again. medicare open enrollment. time to compare plans and costs. you don't have to make changes. but it never hurts to see if you can find better coverage, save money, or both. and check out the preventive benefits you get after the health care law. ♪ open enrollment ends december 7th.

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the new 2013 lexus ls. an entirely new pursuit. it's time now to "clear the air" and offer a special word of thanks to 22 million members of the u.s. armed services. we start at arlington where the commander in chief made these remarks on sunday. take a listen. >> -- two fights for this country overseas should ever have to fight for a job or a roof over their head or the care that they have earned when they come home. [ applause ] >> it would be nice to think that every veteran returning from war has a place to call home, but that is just not the case. in fact, general eric shinseki, the president's secretary of vet trants affairs, says there was more than 60,000 veterans living on the street last year. that's more than the number of all u.s. troops who were killed in vietnam.

think about that. surely those americans didn't give up their lives just so their comrades could be left out in the cold. they gave up their lives because they believed in the promise of a better world, and now it's up to us to deliver on that promise. that means ending homelessness among veterans. it also means reaching out to the 1.6 million veterans of the wars in iraq and afghanistan. about 1 in 5 of those veterans are living with post-traumatic stress disorder or a serious brain injury. veterans of those wars are now killing themselves at a shocking rate of one every 80 minutes. that's simply not acceptable. a country that's great enough to flex its muscles throughout the world should be powerful enough to take care of its own soldiers. as citizens of the united states, we owe these men and women a debt that's too big to pay back in full. but we can make a start at least and show our veterans that the america they return to is an america they can be proud of. thanks for watching. martin will be back here tomorrow. chris matthews picks things up right now.